Bitmain and Ruihe Data Strike Hashrate Deal Amid Mining Slump in the USA
Introduction to the Deal
The Chinese giant in the field of cryptocurrency mining equipment manufacturing, Bitmain, has announced the sale of hashrate to the Hong Kong Stock Exchange-listed company Ruihe Data. This deal represents an important step for Ruihe, as it diversifies its business by entering the bitcoin mining market. The agreement comes amid a reduction in institutional miners' activity in the US, highlighting different approaches to industry development in Asia and North America.
Ruihe Data Enters the Mining Market
According to a statement filed by Ruihe Data with the Hong Kong Stock Exchange, the company will pay Bitmain a service fee in exchange for a share of the mining rewards. Ruihe, with a market capitalization of about HK$1.9 billion (approximately $240 million), traditionally specializes in developing big data and artificial intelligence solutions for financial, government, and corporate clients. The company sees bitcoin mining as a promising segment that not only promises high returns but also aligns with Hong Kong's strategy for developing the virtual asset industry.
Deal Terms and Bitmain's Offerings
The size of the deal and the specific hashrate models are not disclosed, but it is known that Bitmain offers hosting platforms Antminer S21 Hydro and S21e Hydro at prices of $15/TH/s and $13/TH/s respectively. For example, the S21e Hydro hosting platform is priced at $4030, with a projected bitcoin payout equating to 105% of this amount over 230 days. To attract customers amid declining demand in the US, Bitmain has implemented flexible payment options. After achieving a 105% return on investment, customers can choose one of three options:
Retain the miner by paying a hosting fee of $0.1 per kWh;
Transfer ownership of the miner to Bitmain to cover operating expenses;
Upgrade to a new hosting Antminer with a 5% discount.
Bitmain effectively offers a guaranteed 5% return in less than a year, although the company's calculations are based on a hashing price of $59/PH/s (with a bitcoin price of $120,000 and a network hashrate of 918 EH/s). In reality, the current hashing price stands around $53/PH/s, which is 10% lower than forecasted, creating certain risks for investors.
Strategic Contrast: Asia vs. USA
The deal highlights the divergence in mining approaches between Asian and American companies. While Bitmain and Ruihe are betting on hosted hashrate, major miners in the US are reducing or halting new projects due to increased mining difficulty, rising power costs, and declining margins. Instead, American companies are pivoting towards artificial intelligence and high-performance computing, reflecting a change in priorities given the challenging mining economics.
Outlook and Market Implications
The collaboration between Bitmain and Ruihe Data demonstrates sustained interest in bitcoin mining in Asia despite global challenges. For Ruihe, this is an opportunity to expand its business and strengthen its position in the rapidly growing digital asset industry. For Bitmain, the deal affirms the strategic shift towards hosting solutions, allowing the company to adapt to changing market conditions. However, the decline in hashing price and bitcoin market volatility require investors to carefully analyze risks.